Politech: FC: FBI probing Israeli wiretapping at White House --Insight mag

[Declan McCullagh <declan () well com>]

********

From: "James Lucier" <James.Lucier () att net>
To: <declan () well com>
Date: Fri, 5 May 2000 18:34:45 -0400

INSIGHT MAGAZINE
5/5/00
**EXCLUSIVE**

FBI Probes Espionage at Clinton White House

A foreign spy service appears to have penetrated secret communications in 
the Clinton administration, which has discounted security and intelligence 
threats.
By J. Michael Waller and Paul M. Rodriguez

The FBI is probing an explosive foreign-espionage operation that could 
dwarf the other spy scandals plaguing the U.S. government. Insight has 
learned that FBI counterintelligence is tracking a daring operation to spy 
on high-level U.S. officials by hacking into supposedly secure telephone 
networks. The espionage was facilitated, federal officials say, by lax 
telephone-security procedures at the White House, State Department and 
other high-level government offices and by a Justice Department 
unwillingness to seek an indictment against a suspect.
The espionage operation may have serious ramifications because the FBI has 
identified Israel as the culprit. It risks undermining U.S. public support 
for the Jewish state at a time Israel is seeking billions of tax dollars 
for the return of land to Syria. It certainly will add to perceptions that 
the Clinton-Gore administration is not serious about national security. 
Most important, it could further erode international confidence in the 
ability of the United States to keep secrets and effectively lead as the 
world^Òs only superpower.
More than two dozen U.S. intelligence, counterintelligence, law-enforcement 
and other officials have told Insight that the FBI believes Israel has 
intercepted telephone and modem communications on some of the most 
sensitive lines of the U.S. government on an ongoing basis. The worst 
penetrations are believed to be in the State Department. But others say the 
supposedly secure telephone systems in the White House, Defense Department 
and Justice Department may have been compromised as well.
The problem for FBI agents in the famed Division 5, however, isn^Òt just 
what they have uncovered, which is substantial, but what they don^Òt yet 
know, according to Insight^Òs sources interviewed during a year-long 
investigation by the magazine. Of special concern is how to confirm and 
deal with the potentially sweeping espionage penetration of key U.S. 
government telecommunications systems allowing foreign eavesdropping on 
calls to and from the White House, the National Security Council, or NSC, 
the Pentagon and the State Department.
The directors of the FBI and the CIA have been kept informed of the ongoing 
counterintelligence operation, as have the president and top officials at 
the departments of Defense, State and Justice and the NSC. A ^Óheads up^Ô has 
been given to the House and Senate Intelligence Committees, but no 
government official would speak for the record.
^ÓIt^Òs a huge security nightmare,^Ô says a senior U.S. official familiar with 
the super-secret counterintelligence operation. ^ÓThe implications are 
severe,^Ô confirms a second with direct knowledge. ^ÓWe^Òre not even sure we 
know the extent of it,^Ô says a third high-ranking intelligence official. 
^ÓAll I can tell you is that we think we know how it was done,^Ô this third 
intelligence executive tells Insight. ^ÓThat alone is serious enough, but 
it^Òs the unknown that has such deep consequences.
A senior government official who would go no further than to admit 
awareness of the FBI probe, says: ^ÓIt is a politically sensitive matter. I 
can^Òt comment on it beyond telling you that anything involving Israel on 
this particular matter is off-limits. It^Òs that hot.
It is very hot indeed. For nearly a year, FBI agents had been tracking an 
Israeli businessman working for a local phone company. The man^Òs wife is 
alleged to be a Mossad officer under diplomatic cover at the Israeli 
Embassy in Washington. Mossad ^× the Israeli intelligence service ^× is known 
to station husband-and-wife teams abroad, but it was not known whether the 
husband is a full-fledged officer, an agent or something else. When federal 
agents made a search of his work area they found a list of the FBI^Òs most 
sensitive telephone numbers, including the Bureau^Òs ^Óblack^Ô lines used for 
wiretapping. Some of the listed numbers were lines that FBI 
counterintelligence used to keep track of the suspected Israeli spy 
operation. The hunted were tracking the hunters.
^ÓIt was a shock,^Ô says an intelligence professional familiar with the FBI 
phone list. ^ÓIt called into question the entire operation. We had been 
compromised. But for how long?
This discovery by Division 5 should have come as no surprise, given what 
its agents had been tracking for many months. But the FBI discovered enough 
information to make it believe that, somehow, the highest levels of the 
State Department were compromised, as well as the White House and the NSC. 
According to Insight^Òs sources with direct knowledge, other secure 
government telephone systems and/or phones to which government officials 
called also appear to have been compromised.
The tip-off about these operations ^× the pursuit of which sometimes has led 
the FBI on some wild-goose chases ^× appears to have come from the CIA, says 
an Insight source. A local phone manager had become suspicious in late 1996 
or early 1997 about activities by a subcontractor working on phone-billing 
software and hardware designs for the CIA.
The subcontractor was employed by an Israeli-based company and cleared for 
such work. But suspicious behavior raised red flags. After a fairly quick 
review, the CIA handed the problem to the FBI for follow-up. This was not 
the first time the FBI had been asked to investigate such matters and, 
though it was politically explosive because it involved Israel, Division 5 
ran with the ball. ^ÓThis is always a sensitive issue for the Bureau,^Ô says 
a former U.S. intelligence officer. ^ÓWhen it has anything to do with 
Israel, it^Òs something you just never want to poke your nose into. But this 
one had too much potential to ignore because it involved a potential 
systemwide penetration.
Seasoned counterintelligence veterans are not surprised. ^ÓThe Israelis 
conduct intelligence as if they are at war. That^Òs something we have to 
realize,^Ô says David Major, a retired FBI supervisory special agent and 
former director of counterintelligence at the NSC. While the U.S. approach 
to intelligence is much more relaxed, says Major, the very existence of 
Israel is threatened and it regards itself as is in a permanent state of 
war. ^ÓThere are a lot less handcuffs on intelligence for a nation that sees 
itself at war,^Ô Major observes, but ^Óthat doesn^Òt excuse it from our 
perspective.
For years, U.S. intelligence chiefs have worried about moles burrowed into 
their agencies, but detecting them was fruitless. The activities of Israeli 
spy Jonathan Pollard were uncovered by accident, but there remains 
puzzlement to this day as to how he was able to ascertain which documents 
to search, how he did so on so many occasions without detection, or how he 
ever obtained the security clearances that opened the doors to such 
secrets. In all, it is suspected, Pollard turned over to his Israeli 
handlers about 500,000 documents, including photographs, names and 
locations of overseas agents. ^ÓThe damage was incredible,^Ô a current U.S. 
intelligence officer tells Insight. ^ÓWe^Òre still recovering from it.
Also there has been concern for years that a mole was operating in the NSC 
and, while not necessarily supplying highly secret materials to foreign 
agents, has been turning over precious details on meetings and policy 
briefings that are being used to track or otherwise monitor government 
activities. The current hush-hush probe by the FBI, and what its agents 
believe to be a serious but amorphous security breach involving telephone 
and modem lines that are being monitored by Israeli agents, has even more 
serious ramifications. ^ÓIt has been an eye opener,^Ô says one high-ranking 
U.S. government official, shaking his head in horror as to the potential 
level and scope of penetration.
As for how this may have been done technologically, the FBI believes it has 
uncovered a means using telephone-company equipment at remote sites to 
track calls placed to or received from high-ranking government officials, 
possibly including the president himself, according to Insight^Òs top-level 
sources. One of the methods suspected is use of a private company that 
provides record-keeping software and support services for major telephone 
utilities in the United States.
A local telephone company director of security Roger Kochman tells Insight, 
^ÓI don^Òt know anything about it, which would be highly unusual. I am not 
familiar with anything in that area.
U.S. officials believe that an Israeli penetration of that telephone 
utility in the Washington area was coordinated with a penetration of agents 
using another telephone support-services company to target select telephone 
lines. Suspected penetration includes lines and systems at the White House 
and NSC, where it is believed that about four specific phones were 
monitored ^× either directly or through remote sites that may involve 
numbers dialed from the complex.
^Ó[The FBI] uncovered what appears to be a sophisticated means to listen in 
on conversations from remote telephone sites with capabilities of providing 
real-time audio feeds directly to Tel Aviv,^Ô says a U.S. official familiar 
with the FBI investigation. Details of how this could have been pulled off 
are highly guarded. However, a high-level U.S. intelligence source tells 
Insight: ^ÓThe access had to be done in such a way as to evade our 
countermeasures ^Å That^Òs what^Òs most disconcerting.
Another senior U.S. intelligence source adds: ^ÓHow long this has been going 
on is something we don^Òt know. How many phones or telephone systems we 
don^Òt know either, but the best guess is that it^Òs no more than 24 at a 
time ^Å as far as we can tell.
And has President Clinton been briefed? ^ÓYes, he has. After all, he^Òs had 
meetings with his Israeli counterparts,^Ô says a senior U.S. official with 
direct knowledge. Whether the president or his national-security aides, 
including NSC chief Sandy Berger, have shared or communicated U.S. 
suspicions and alarm is unclear, as is the matter of any Israeli response. 
^ÓThis is the first I^Òve heard of it,^Ô White House National Security Council 
spokesman Dave Stockwell tells Insight. ^ÓThat doesn^Òt mean it doesn^Òt exist 
or that someone else doesn^Òt know.^Ô
Despite elaborate precautions by the U.S. agencies involved, say Insight^Òs 
sources, this alleged Israeli intelligence coup came down to the weakest 
link in the security chain: the human element. The technical key appears to 
be software designs for telephone billing records and support equipment 
required for interfacing with local telephone company hardware installed in 
some federal agencies. The FBI has deduced that it was this sophisticated 
computer-related equipment and software could provide real-time audio 
feeds. In fact, according to Insight^Òs sources, the FBI believes that at 
least one secure T-1 line routed to Tel Aviv has been used in the suspected 
espionage.
The potential loss of U.S. secrets is incalculable. So is the possibility 
that senior U.S. officials could be blackmailed for indiscreet telephone 
talk. Many officials do not like to bother with using secure, encrypted 
phones and have classified discussions on open lines.
Which brings the story back to some obvious questions involving the 
indiscreet telephone conversations of the president himself. Were they 
tapped, and, if so did they involve national-security issues or just 
matters of the flesh? Monica Lewinsky told Kenneth Starr, as recounted in 
his report to Congress, that Lewinsky and Clinton devised cover stories 
should their trysts be uncovered and/or their phone-sex capers be overheard.
Specifically, she said that on March 29, 1997, she and Clinton were huddled 
in the Oval Office suite engaging in a sexual act. It was not the first 
time. But, according to Lewinsky as revealed under oath to the 
investigators for the Office of Independent Counsel, it was unusual because 
of what the president told her. ^ÓHe suspected that a foreign embassy was 
tapping his telephones, and he proposed cover stories,^Ô the Starr report 
says. ^ÓIf ever questioned, she should say that the two of them were just 
friends. If anyone ever asked about their phone sex, she should say that 
they knew their calls were being monitored all along, and the phone sex was 
just a put on.^Ô
In his own testimony before a federal grand jury, Clinton denied the 
incident. But later ^× much later ^× he admitted to improper behavior and was 
impeached but not convicted. U.S. District Court Judge Susan Webber Wright 
found him to have obstructed justice. Curiously, Starr never informed 
Congress whether the Lewinsky tale was true. For that matter, according to 
Insight^Òs sources, Starr never bothered to find out from appropriate 
agencies, such as the FBI or the CIA, whether the monitoring by a foreign 
government of the president^Òs conversations with Lewinsky occurred.
Insight has learned that House and Senate investigators did ask questions 
about these matters and in late 1998 were told directly by the FBI and the 
CIA (among others) that there was no truth to the Lewinsky claim of foreign 
tapping of White House phones. Moreover, Congress was told there was no 
investigation of any kind involving any foreign embassy or foreign 
government espionage in such areas.
But that was not true. In fact, the FBI and other U.S. agencies, including 
the Pentagon, had been working furiously and painstakingly for well over a 
year on just such a secret probe, and fears were rampant of the damage that 
could ensue if the American public found out that even the remotest 
possibility existed that the president^Òs phone conversations could be 
monitored and the president subject to foreign blackmail. To the FBI agents 
involved, that chance seemed less and less remote.
The FBI has become increasingly frustrated by both the pace of its 
investigation and its failure to gain Justice Department cooperation to 
seek an indictment of at least one individual suspected of involvement in 
the alleged Israeli telephone intercepts. National security is being 
invoked to cover an espionage outrage. But, as a high law-enforcement 
source says, ^ÓTo bring this to trial would require we reveal our methods of 
operation, and we can^Òt do that at this point ^Ö the FBI has not made the 
case strong enough.^Ô Moreover, says a senior U.S. policy official with 
knowledge of the case: ^ÓThis is a hugely political issue, not just a 
law-enforcement matter.^Ô
^ÑYou^Òve Got the Crown Jewels^Ò

If spies wanted to penetrate the White House, a facility widely considered 
the most secure in the world, how might it be done? For that matter, how 
might any agency or department of government be penetrated by spies?
^ÓActually, it^Òs pretty easy if you know what you^Òre doing,^Ô says a retired 
U.S. intelligence expert who has helped (along with other government 
sources) to guide Insight through the many and often complicated pathways 
of government security and counterespionage.
Access to designs, databases, ^Óblueprints,^Ô memos, telephone numbers, lists 
of personnel and passwords all can be obtained. And from surprising 
sources. Several years ago this magazine was able to review from a remote 
site information on the supposedly secret and inaccessible White House 
Office Data Base, or WHODB (see ^ÓMore Personal Secrets on File @ the White 
House,^Ô July 15, 1996).
Despite the spending of additional millions to beef up security when the 
White House installed a modern $30 million computerized telephone system a 
few years ago, communications security remains a big problem. Whatever the 
level of sophistication employed, there are soft underbellies that raise 
significant national-security problems. And potential for espionage, such 
as electronic intercepting of phone calls, is very great.
Calls to or from the White House dealing with classified information are 
supposed to be handled on secure lines, but it doesn^Òt always happen. 
Sometimes, according to Insight^Òs sources, despite the existence of special 
phones at the White House and elsewhere to handle such calls, some don^Òt 
use them or only one side of the call does. An Insight editor recently was 
allowed for demonstration purposes to overhear a conversation placed over 
an unsecured line involving a ^Óclassified^Ô topic.
Carelessness always has been a problem, but former and current FBI special 
agents say that under the Clinton administration the disregard for security 
has been epidemic. Many officials simply don^Òt like the bother of 
communicating on secure phones.
In another instance, Insight was provided access to virtually every 
telephone number within the White House, including those used by outside 
agencies with employees in the complex, and even the types of computers 
used and who uses them. Just by way of illustration, this information 
allowed direct access to communications instruments located in the Oval 
Office, the residence, bathrooms and grounds.
With such information, according to security and intelligence experts, a 
hacker or spy could target individual telephone lines and write software 
codes enabling the conversations to be forwarded in real-time for remote 
recording and transcribing. The White House complex contains approximately 
5,800 voice, fax and modem lines.
^ÓHaving a phone number in and of itself will not necessarily gain you 
access for monitoring purposes,^Ô Insight was told by a senior intelligence 
official with regular contact at the White House. ^ÓThe systems are designed 
to electronically mask routes and generate secure connections.^Ô That said, 
coupling a known phone number to routing sequences and trunk lines would 
pose a security risk, this official says.
Add to that detailed knowledge of computer codes used to move call traffic 
and your hacker or spy is in a very strong position. ^ÓThat^Òs why we have so 
many redundancies and security devices on the systems ^× so we can tell if 
someone is trying to hack in,^Ô says a current security official at the 
White House.
Shown a sampling of the hoard of data collected over just a few months of 
digging, the security official^Òs face went flush: ^ÓHow the hell did you get 
that! This is what we are supposed to guard against. This is not supposed 
to be public.^Ô
Indeed. Nor should the telephone numbers or locations of remote sites or 
trunk lines or other sundry telecommunications be accessible. What^Òs 
surprising is that most of this specialized information reviewed by Insight 
is unclassified in its separate pieces. When you put it together, the 
solved puzzle is considered a national-security secret. And for very good 
reason.
Consider the following: Insight not only was provided secure current phone 
numbers to the most sensitive lines in the world, but it discovered a 
remote telephone site in the Washington area which plugs into the White 
House telecommunications system. Given national-security concerns, Insight 
has been asked not to divulge any telephone number, location of 
high-security equipment, or similar data not directly necessary for this 
news story.
Concerning the remote telecommunications site, Insight discovered not only 
its location and access telephone numbers but other information, including 
the existence of a secret ^Óback door^Ô to the computer system that had been 
left open for upward of two years without anyone knowing about the security 
lapse. This back door, common to large computer systems, is used for a 
variety of services, including those involving technicians, supervisors, 
contractors and security officers to run diagnostic checks, make repairs 
and review system operations.
^ÓThis is more than just a technical blunder,^Ô says a well-placed source 
with detailed knowledge of White House security issues. ^ÓThis is a very 
serious security failure with unimaginable consequences. Anyone could have 
accessed that [back door] and gotten into the entire White House phone 
system and obtained numbers and passwords that we never could track,^Ô the 
source said, echoing yet another source familiar with the issue.
Although it is not the responsibility of the Secret Service to manage 
equipment systems, the agency does provide substantial security controls 
over telecommunications and support service into or out of the White House. 
In fact, the Secret Service maintains its own electronic devices on the 
phone system to help protect against penetration. ^ÓThat^Òs what is so 
troubling about this,^Ô says a security expert with ties to the White House. 
^ÓThere are redundant systems to catch such errors and this was not caught. 
It^Òs quite troubling.^Å It^Òs not supposed to happen.^Ô
Insight asked a senior federal law-enforcement official with knowledge of 
the suspected Israeli spying case about the open electronic door. ^ÓI didn^Òt 
know about this incident. It certainly is something we should have known 
given the scope of what^Òs at stake,^Ô the official says.
Then Insight raised the matter of obtaining phone numbers, routing systems, 
equipment sites, passwords and other data on the telecommunications systems 
used by the White House: How hard would it be for a foreign intelligence 
service to get this information? ^ÓObviously not as hard as we thought,^Ô a 
senior government official said. ^ÓNow you understand what we^Òre facing and 
why we are so concerned.^Ô
That^Òs one reason, Insight is told, the White House phone system is 
designed to mask all outgoing calls to prevent outsiders from tracing back 
into the system to set up taps. However, knowing the numbers called 
frequently by the White House, foreign agents could set up listening 
devices on those lines to capture incoming or outgoing calls. Another way 
of doing it, according to security experts, is to get inside the White 
House system. And, though it^Òs considered impossible, that^Òs what they said 
about getting the phone numbers that the president uses in his office and 
residence. Like trash, information is everywhere ^× and often is overlooked 
when trying to tidy up a mess.
^× PMR and JMW

^ÑSo What, It^Òs Only Israel!^Ò

There is a tendency in and out of government to minimize the impact of 
Israeli espionage against the United States because Israel is a friendly 
country. That overlooks the gravity of the espionage threat, says David 
Major, former director of counterintelligence programs at the National 
Security Council. ^ÓThis ^Ñdon^Òt worry about allied spying, it^Òs okay^Ò 
attitude is harmful,^Ô he warns. ^ÓThe U.S. should expect that the rest of 
the world is bent on rooting out its national-security secrets and the 
secrets that could subject its leaders to blackmail.^Ô Minimizing or 
excusing ^Ófriendly spying,^Ô he argues, only discourages vigilance and 
encourages more attacks on U.S. national security. ^ÓI^Òm not outraged by 
nations that find it in their interests to collect intelligence but by our 
unwillingness to seriously pursue counterintelligence.^Ô
Major, now dean of the private Center for Counterintelligence and Security 
Studies, asks: ^ÓWhat price should Israel pay for this? My predictions are 
that there will be no impact whatsoever. Do we put our heads in the sand or 
do we take it as a wake-up call?^Ô
Others observe that Israel has passed stolen U.S. secrets to America^Òs 
adversaries. The government of Yitzhak Shamir reportedly provided the 
Soviet Union with valuable U.S. documents stolen by Israeli spy Jonathan 
Pollard. ^ÓIt^Òs the security equivalent of herpes,^Ô says a former U.S. 
antiterrorism official now at a pro-Israel think tank who requested 
anonymity. ^ÓWho gets it [beyond Israel] nobody knows.... Once we let it 
happen, the word gets out that ^Ñyou can get away with this.^Ò^Ô

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